Why dont you tell the real story. Germany needs the crisis to bring the euro down for her export. Germany cannot have the crisis escalate to wake the dumb enslaved members to quit. Germany is trading the forex market handsomely. Buying on the low and selling on the high. She accumulates her reserve and eventually will buy all the bankrupt nations like greece, italy, spain, france.
The Germans are back but without their tanks.

For every new governing body that gets created 2 should be taken down. Otherwise, this ongoing political paralysis will continue. There are two quasi-efficient approaches:
1) dissolution, creating a loose enterprise zone with some shared agencies, but not currencies or
2) deep centralization with governance, which will never happen as long as there are places like Germany (oil) and Spain (water) cobbled together.
Everything in between seems half-baked with endless layers of bureaucracy.

I think Europeans are at the extreme on both fronts. I can tell you stories of people who have gone bankrupt waiting for a liquor license in Spain.

Yes, the US has its issues too. The problem here is people are so indifferent about local politics that we end up with a bunch of small-time crooks with mini-fiefdoms, like Charles Rangel in NYC. They never get voted out because people are dumb or apathetic.

"Absurdity and tension, the spectacle that is the euro crisis."
This is quite an absurd statement, that could clearly create tension between this writer the readers. Was it made in attempt to create a spectacle for the readers?

A devalued currency will prop up all the assets that the EURO Zone's troubled banks need in order to balance their sheets.

A devalued currency will increase the cost of consumption in terms of Euros, therefore forcing consumers to consume LESS (thats excactly what they need to do in PIG countries, force them to consume less.)

A devalued currency will give EURO Zone countries a short term comparative advantage in the export market while reducing their imports from abroad.

so that leaves the problem that they still need foreign energy... Thank god no one has been shutting down domesticly produced nuclear...wait...

This statement, I think, is a bit naive. Less consumption would also worsen the crisis over the long term (less spending implies a reduced tax source, which implies less access to public funds).
Also, a devalued currency increases the cost of debt repayments (to foreign creditors).
Also, a devalued currency could put a starin on the capital sources of banks (a devlaued currency would create a flight of currency, which could create liquidity issues for banks that are already lacking capital).

"the EURO Zone's troubled banks need in order to balance their sheets."
if any bank wants or needs to balance its sheets, it should start with the internal cost structures instead of demading even more taxpayer's money.
Example: Deutsche Bank has about 77.000 employees, average salary is about 150.000€ per year. If this would be reduced to what in the real economy is paid, about 7 billion euro per year would be free for bolstering the balance sheet. And it is the very same with ALL of the big banks. Now?

Only if the debt is denominated in the foreign currency, otherwise it could actually reduce the cost of repayment (you simply print more money to pay off the debt). Everything else you said I agree with though.

Well devaluing solves only immediate problem of having so much debt that not only paying back is impossible (good for the banks living off the credit to the in this way savaged states) but servicing debt too which may induce falling off banks with feared domino effect (this however does not have to materialize).
After fixing immediate debt problem (which amounts to Germans giving up their savings) you have to fix the structural problems that caused the debt problem in the first place. Rigid monetary policy is one but spending like hell without securing financing other than debt is the main reason. This has to be addressed as even if Germany agrees to pay (???) and it does not collapse under burden of southern debt (which is manageable but difficult as this additional debt is being put on top of its own sizable one) it will eventually do that i.e. collapse if debt creation does not slow down significantly. How to get that done without destructing your society is a good question.

Inflation... just what the silly buggers want. Inflation spreads the pain of their stupid decisions to everybody. This should be duked out between debtors and creditors - the former must endure the pain of repaying their debts, and the latter the pain of getting their debt holdings cut. Offloading this pain to everybody through inflation should not be tolerated.

One of the main reasons for the German position is based on the "awful German language" (I'm a native speaker myself, so I can say that): the word "Schuld" means debt and guilt - the English have two words to differentiate. We always have the moral ring and will never be able to think clearly about it. That's why thinking about money and the economy is essentially petit bourgeois in Germany ...

The wonderful thing about World War II was that it had a beginning and an end. And it only spanned 6 years of annihilation and destruction. But it was decisive. And afterwards, things were rebuilt new and better.
This European Debt Crisis may take a decade to resolve. If not several decades or generations for debts to be squared.
It took our fore-bearers less time to rebuild all of Europe from catastrophic rubble.... than it takes EU leaders to agree to a fiscal compromise and solution. The problems today seem generational. And there is even cloudy disagreement whether a problem exists.
Bricks and mortar are a lot easier than dealing with lawyers and contracts.
Wars are more romantic. And simpler.

No eurobonds, as long as Merkel lives, that's what she said today. May she live very, very long.
As for the 7page paper by the eurocrats: forget it. It is all about shovelling GIPSIFs (Greece Ireland Portugal Spain Italy France) debt to the GANFs (Germany Austria Netherlands Finland). But no control fore the creditors.
Sort of taxation without representation. The debtors want to set the terms and conditions on which they accept to have their free lunches paid by others.
Will not, can not, should not happen, never.

The dynamic of how ethical and responsible behaviors eventually bring greater rewards is certainly complicated. To a generation addicted to instant gratification, it might indeed resemble a Rube Goldberg machine.

This is definitely and improvement on the "we will do whatever it takes" argument, and provides an optimistic but plausible solution to the crisis provided it it can be achieved in time. There is much that can still go wrong but this is at least a promising step towards a way out of the crisis

i'm not clear why the ECB needs to stand behind euro-area government debt - that sounds like a really bad idea to me (and I suspect, rightly, to the Germans).

The ECB should stand ready to act as a LOLR to banks to prevents bank runs across the euro area, but that's about it.

In the future, if banks lend to euro-area governments, they need to keep in mind that their credit risks could be different depending on their relative fiscal positions (although the stricter co-ordination as proposed will go some way to aligning their positions). That's healthy, in that market discipline, not eurocrats, should police euro government profligacy.

And if they agree to this, then I think Germany will reasonably agree to a debt-restructuring/forgiveness solution for the periphery which wipes off big chunks of their debt, and leaves the Germans to make good the consequent losses to their banks. Bank shareholders and creditors should take their share of the pain though.

As I understand it (why I probably don't), it avoids the self-fulfilling liquidity crisis which can cripple otherwise solvent nations.

So Spain is solvent if it can finance debt at under x%, where x is a number that gives a more than high enough return for investors to be interested if the risk is trivial. Under normal circumstances this isn't a problem, but in a crisis investors realise that maybe Spain won't always be able to refinance at less than x%, thus they perceive a risk, and thus they demand a higher return, and thus create the very problem that they feared.

A nation sovereign in its own currency doesn't have this problem, since its central bank has unlimited firepower to keep the rate at under x%, and to guarantee to investors that they will receive the interest owed, and the face value of their bonds when they come due.

This won't help an insolvent country of course, since if the country prints to finance itself as a routine matter, the currency will become worthless. But it does make it far far less vulnerable to liquidity crunches and speculative attack. At the end of the day, if you have to hold an amount of that currency anyway, then you might as well buy government debt - the risk is the same and you earn interest on the debt.

i see where you're coming from, but central banks don't normally underwrite their sovereign's borrowing, even in crisis. This is precisely why an independent central bank is supposed to be more credible in fighting inflation than one that isn't.

There are institutions that exist to help sovereigns that get into liquidity-to-solvency crises. The IMF exists for this purpose, and more recently, the ESM in Europe which does the same thing. Clearly, they need to have enough funds to be able to provide adequate liquidity support.

But it is not the job of central banks to do this - indeed, it musn't be, because the moral hazard is too great and would undermine the independence of the central bank.